01—Abstract
Summary
Summary of the 10-K filed February 28, 2013. Cited figures are marked; the original filing is the authoritative source.
PPL Corporation's combined 2012 Form 10-K, filed with five subsidiary registrants, reports operating revenues of $12.3 billiona, operating income of $3.1 billion and net income attributable to PPL shareowners of $1.53 billion, or $2.60 diluted EPS.
The filing states that about 56% of operating revenues came from regulated businesses and about 71% of assets and 73% of net income came from regulated businesses. Earnings rose 2% over 2011, driven by the 2010 LKE and 2011 WPD Midlands acquisitions, while Supply segment net income fell to $414 millionb from $776 million. The filing states that Supply segment earnings declined because of depressed wholesale power and gas prices and a shift from coal-fired to combined-cycle gas generation, with Pennsylvania coal plant utilization falling to 69% in 2012 from 87% in 2009-2011.
PPL Energy Supply recorded $29 millionc of pre-tax coal contract modification charges. The company projects higher 2013 earnings excluding special items for the Kentucky and Pennsylvania regulated segments and lower earnings for the Supply segment. Capital expenditures are projected at about $18.5 billion for 2013-2017, with environmental spending of $750 million in 2013 at the consolidated level.
The filing also discloses the outstanding IRS case on the U.K. Windfall Profits Tax, which the U.S. Supreme Court agreed to review, and a 2013 dividend increase to $1.47d per share annualized.
02—Key points
Key Highlights
- Operating revenues of $12,286 million in 2012, down from $12,737 million in 2011; operating income of $3,109 million, essentially flat with $3,101 million in 2011.
- Net income attributable to PPL shareowners was $1,526 million, or $2.60 diluted EPS, compared with $1,495 million, or $2.70 diluted EPS, in 2011.
- Regulated businesses generated about 73% of 2012 net income attributable to PPL shareowners and held about 71% of total assets at December 31, 2012.
- Supply segment net income fell to $414 million from $776 million, reflecting lower gross energy margins and a shift from coal to gas-fired dispatch.
- Kentucky rate case settlement approved by the KPSC raised annual base electric rates by $34 million at LG&E and $51 million at KU, effective January 1, 2013, with a 10.25% authorized return on equity.
- Projected capital expenditures total about $18.5 billion for 2013-2017, including environmental projects, Cane Run Unit 7 and the Susquehanna-Roseland transmission line.
- The quarterly dividend was raised to 36.75 cents per share in February 2013, equivalent to $1.47 annually, after $1.44 per share was declared for 2012.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2012filed February 28, 2013Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $12.13B$12.74B | −4.7% |
| Operating Income | $3.03B$3.10B | −2.4% |
| Interest Expense | $951.00M$898.00M | +5.9% |
| Net Income | $1.53B$1.50B | +2.1% |
| EPS (Basic) | $2.61$2.71 | −3.7% |
| EPS (Diluted) | $2.60$2.70 | −3.7% |
| Shares Outstanding (Basic) | 580.28M550.39M | +5.4% |
| Shares Outstanding (Diluted) | 581.63M550.95M | +5.6% |
05—Questions
Frequently Asked Questions
How did PPL's earnings change in 2012?
Net income attributable to PPL shareowners was $1,526 million in 2012 versus $1,495 million in 2011, and diluted EPS was $2.60 versus $2.70. The filing states that earnings increased 2% over 2011, with the regulated U.K. Regulated segment rising to $803 million from $325 million while the Supply segment declined to $414 million from $776 million.
What drove the decline in the Supply segment?
The filing attributes the decline to depressed wholesale electricity and natural gas prices and a shift in dispatch from coal-fired to combined-cycle gas generation. Pennsylvania coal plant utilization was 69% in 2012 versus 87% in 2009-2011, while combined-cycle gas plant utilization was 98% versus 72%. Unregulated Gross Energy Margins decreased $197 million.
What regulatory changes affect the company's 2013 outlook?
The filing reports that electric and gas base rate increases took effect January 1, 2013 for LG&E and KU, and a $71 million distribution revenue increase took effect January 1, 2013 for PPL Electric after a 10.4% return on equity was approved. PPL projects higher 2013 earnings in the regulated segments, excluding special items, and lower earnings for the Supply segment.
What major capital commitments does PPL disclose?
PPL projects capital expenditures of about $18.5 billion for 2013 through 2017, including $750 million of environmental spending in 2013. Major projects cited include the Cane Run Unit 7 combined-cycle unit, estimated at about $600 million, and the PJM-directed Susquehanna-Roseland transmission line, with PPL Electric's estimated share at $560 million.
What pending legal matter could affect results?
The filing discloses a dispute over the 1997 U.K. Windfall Profits Tax. After the Third Circuit ruled against PPL, the U.S. Supreme Court granted review and heard oral argument on February 20, 2013. PPL expects a decision by June 2013 and states it cannot predict the outcome. PPL recorded a $39 million expense in 2011 after the Third Circuit ruling.
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